Carl Icahn Versus Apple

Carl Icahn is a 74 year old American billionaire. Carl Icahn is not as well known as some of America’s other billionaires. Warren Buffett, George Soros, and Mike Bloomberg are three billionaires with much higher name recognition.

The ukulele playing “good old boy,” Warren Buffett, is a different type of billionaire than Carl Icahn. ” Grandpa” Buffett shuffels in with his seemingly shy and gentle manner. Icahn is anything but shy and gentle.

In 2013, Icahn is one of many powerful and very rich stock investors who now call themselves shareholder activists. In the 1980’s, Icahn would have been called a corporate raider. The corporate raiders came to be known as ” barbarians at the gate,” after the title of a book by Bryan Burrough and John Helyar.

Times change and so do SEC regulations and U.S. Banking laws. Now Icahn, the 20 billion dollar man, has decided to take on one of the world’s wealthiest corporations. Icahn, using his shareholder activist label, has decided to influence Apple.

Corporations all over the U.S. are stockpiling cash and are avoiding investments that could heat up the U.S. economy. These trends are viewed as signs that businesses believe that the U.S. trend today is for a 2 percent yearly growth rate. Record amounts of cash are on the balance sheets of American corporations. U.S. based corporations are holding a record $ 2 trillion in the U.S. system with an estimated additional $ 2 trillion held offshore. ( Editor’s note: Yes, that is trillion not billion ! )

Activists like Icahn believe that companies that are cash rich should take a portion of that cash and give it to investors in the form of higher dividends and common stock buybacks.

Apple is a strong opponent even for the 20 billion dollar man to take on. Apple is unique in the U.S. equity market. It is the world’s most valuable company. ( Editor’s note: Apple and ExxonMobil change places as the world’s most valuable corporation as the market value for their stock changes on the open market.)

On December 27, 2013, Apple rejected Icahn’s suggestions and encouraged their shareholders to support Apple’s corporate Board. Icahn and Apple’s CEO, Tim Cook, have had a friendly relationship in the past.

Icahn is known to be charming when you agree with him, but he can be very harsh and forceful when you disagree with him. Icahn versus Apple will be the main attraction in 2014, and the fight appears that it will last the full fifteen rounds.

R. Van Conoley ( Editor’s Note: Suggested readings: 1) Financial Common Sense-Part 1, 2) Financial Common Sense-Part 2, and 3) Financial Common Sense-Part 3. All are on this website. All articles are available to the public and it is not necessary to register to read the articles. Registration is only required if individuals wish to send a comment. )